The Bombay High Court, while examining the scope of Section 52 of the Transfer of Property Act, 1882, clarified the circumstances under which the doctrine of lis pendens no longer applies. The judgment was delivered by Justice Sharmila U. Deshmukh in the matter titled Arjan Motiram Khiani v. Metharam Rijhumal Khiani, through First Appeal No. 128 of 2020.
"Post alienation by way of sale or surrender, the immovable properties are no longer available for distribution and what remains is money claim based on accounts and valuation of properties," stated the court. "Post alienation, the complexion of the suit changed into a suit for accounts or at the best a money claim to which the doctrine of lis pendens has no applicability."
The case revolved around a property dispute where the Plaintiffs had sought equal division of assets from four partnership firms. The Plaintiffs contended that an Interim Award dated 27 April 1975 was null and void since a Final Award was not passed. They argued that without proper finalisation of accounts and determination of amounts payable, any distribution was invalid.
The Defendants, however, maintained that the Interim Award was based on a fair valuation and was fully implemented. They opposed the Plaintiff's challenge, asserting that the properties had already been divided and taken into possession accordingly.
Originally filed in 1981, the suit was transferred from the Bombay High Court to the City Civil Court after a change in pecuniary jurisdiction. It was dismissed by the City Civil Court on 15 June 2019. Notably, during the lengthy pendency of the case, the Plaintiffs did not secure any interim relief.
On 7 January 1995, while the case was ongoing, the Plaintiffs had registered a lis pendens notice in the Sub-Registrar's office for two properties—one located in Mumbai and another in Delhi—that had been allotted to the Defendants under the 1975 Interim Award.
Despite dismissal of the suit in 2019, the Plaintiffs insisted that the notice of lis pendens remained valid, arguing that the pending appeal was a continuation of the suit. They submitted that even though the properties had been alienated, the Plaintiffs still had a claim based on accounts and property valuation, which they believed kept the notice of lis pendens operative.
The key legal question before the court was whether the doctrine of lis pendens still applied when the disputed properties had already been alienated, and the relief sought had turned into a financial claim rather than a claim to specific immovable assets.
To answer this, the bench revisited Section 52 of the Transfer of Property Act and its interpretation under the Maharashtra Amendment.
The intent behind providing additional safeguard by registration of notice of lis pendens under the Maharashtra Amendment is to ensure that upon registration of the notice, the Transferee who purchases the property would be deemed to have notice of pendency of lis and cannot claim to be bona fide purchaser without notice," observed the court. "Section 52 of TOPA freezes the proprietary right as they stood at the inception of the suit making it evident that it is right to the immovable property which should be directly and specifically in issue for doctrine of lis pendens to be applicable.
The court further noted that due to the continued registration of the notice since 1995, the Defendants were unable to freely deal with their property, as potential buyers were discouraged due to the ongoing dispute. This restriction had remained in place even though the suit had been dismissed in 2019 and no prima facie inquiry had supported the Plaintiffs’ claims.
"The registration of notice of lis pendens has indirectly operated as a restriction on freedom of the Defendants in getting fair market price for the property as prospective buyers tread with caution in case of sub judice property," said the bench.
Finding that the relief now sought was no longer related to immovable property but merely a financial claim, the High Court held that the lis pendens notice no longer served its original purpose. Accordingly, the appeal filed seeking the lifting of lis pendens was allowed.
Senior Advocate Aspi Chinoy, along with Ramesh Soni, Archit Jayakar, and Bhoomi Upadhyay, appeared for the Appellants. Senior Advocate Pravin Samdani, with Kausar Banatwala and N. Thakkar, represented the Respondents. Farhan Dubash, Harshal Manik, and Gobinda C. Mohanty appeared for the Applicant and Respondent Nos. 5 to 7.
The ruling provides clarity on how Section 52 should be interpreted when the subject property is no longer part of the litigation due to alienation, ensuring a balance between property rights and the principle of fair legal process.
